Dh44bn contracts in UAE residential sector

Civil sector contract awarded in the UAE during the first half of 2014 registered a six-year high, according to a new report.

Contracts worth a total of $15 billion (Dh55.095bn) were awarded for major projects – those valued at over $30m (Dh110m) – in the UAE in the civil construction (buildings and transport) sectors, according to half-year data produced by Meed Projects.

Over 50 contracts, worth a total of more than $5.4bn (Dh20bn), were for newly announced or recovered residential projects and a further $3.8bn (Dh14bn) was for mixed-use projects, all with strong residential elements, the report said.

“A clear resurgence of interest in residential projects is behind the best half year for contract awards in the buildings and transport sectors since 2008,” said Julian Herbert, Director of MEED Projects.

“Civil construction projects represented 75 per cent of all awards in the UAE in the first half of the year, and with well over $20bn (Dh74bn) of awards, the UAE was the GCC’s biggest market across all sectors – again, a position it has not held since 2008.”

The strength of the residential projects’ sector is largely due to the recovery of the sector in Dubai, where 44 major contracts totalling $4.8bn (Dh18bn) were awarded in the first six months of 2014. To put this into perspective, Abu Dhabi, with six projects worth a total of $500mn (Dh1.83bn), was the emirate with the second highest level of residential sector awards measured by value.

When smaller contracts worth less than $30mn are included, Dubai’s total of 78 awards make up three quarters of all residential building projects awarded in the UAE in the first half of 2014.

Steady investment in transport infrastructure has been a feature of the UAE economy for a decade and the first half of 2014 has been no different. Over $2bn (Dh7.3bn) in contracts for roads were awarded, mainly in Abu Dhabi, with awards for Dubai’s creek extension and Terminal 4 at Jebel Ali Port bringing the total to over $2.5bn (Dh9.2bn).

The top six contractors measured by value of contracts awarded in the first six months of 2014, all netted over $500mn worth of contracts. Arabian Construction Company (ACC) and Arabtec topped the ranking, with over $1bn (Dh3.67bn) each. Eight of the top 10 and 17 of the top 20 contractors are either local contractors or UAE-headquartered joint ventures.

“The downturn and the lack of work over the past five years led to some foreign contractors leaving the region. It has put local companies and foreign contractors which are in joint venture with local companies in an extremely strong position to pick up work in the early stages of the recovery,” said Herbert.

The resurgence has been characterised by the number of civil construction sector projects coming back to life. Over $15bn (Dh55bn) worth of buildings’ projects have been recovered, with nearly 80 per cent of these in the mixed-use and residential sub-sectors.

Some $9bn (Dh33bn) worth of civil sector projects has moved from ‘on hold’ to an active status in the first six months of 2014 alone.

Meed Projects says that, since August 2013, it has undertaken a rolling programme of visiting and logging every single site where a new building is planned, on hold or under execution in the UAE.

It maintains that details, including GPS co-ordinates and site photographs have been captured for over 2,000 projects worth $1m (Dh3.67m) and above. The programme has revealed not only that many previously on hold projects are being recovered, but that there are 500 previously unrecorded projects at an early stage. These projects now appear in its listings.

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